What is Austin saving for?

The city adopts a much more conservative financial policy.

What is Austin saving for?
City employees protesting Interim City Manager Jesús Garza's proposed changes to the city's remote work policy in June. 

In response to my article yesterday, a reader suggested that I didn't pay enough attention to the "big story" of the city's budget: the big increase in the city's rainy day fund.

Until two years ago, the city's financial policy called for maintaining reserves equal to 12% of the General Fund. In 2021, City Council, on advice from city budget staff, voted to raise the target to 14%. This budget cycle, however, staff recommended raising it again –– all the way to 17%.

As you can see above, there are actually two reserve funds. The Emergency Reserve, which is now set at 10% of the GF, is supposed to be for disaster response. The Budget Stabilization Reserve, now set at 7%, is designed as a financial cushion to weather economic downturns.

After accommodating certain budget requests from Council members, the budget that Council ultimately approved yesterday included a reserve of 16.65%.

If the city stuck with the 14% policy, we'd have roughly $40M extra to spend. If we were still at a 12% policy –– $65M more.